Chapter 2 Quiz 2

Reviewed by Editorial Team
The ProProfs editorial team is comprised of experienced subject matter experts. They've collectively created over 10,000 quizzes and lessons, serving over 100 million users. Our team includes in-house content moderators and subject matter experts, as well as a global network of rigorously trained contributors. All adhere to our comprehensive editorial guidelines, ensuring the delivery of high-quality content.
Learn about Our Editorial Process
| By M. Sarr
M
M. Sarr
Community Contributor
Quizzes Created: 1 | Total Attempts: 127
| Attempts: 127
Quiz Flashcard
SettingsSettings
Please wait...
  • 1/15 Questions

    A list of accounts and their balances at a given time is called

    • A journal.
    • A chart of account.
    • A trial balance
    • An income statement.
Please wait...
About This Quiz

Chapter 2 Quiz 2 - Quiz

Quiz Preview

  • 2. 

    A credit is

    • A negative amount

    • Better than a debit

    • An entry on the right hand side of an account

    • Beneficial to the business

    Correct Answer
    A. An entry on the right hand side of an account
    Explanation
    An entry on the right hand side of an account is considered a credit. In accounting, credits are used to record increases in liability, equity, and revenue accounts, as well as decreases in asset and expense accounts. It is important to note that credits and debits are two sides of the same coin in double-entry bookkeeping, where every transaction has an equal and opposite effect on both sides of the equation. Therefore, a credit entry on the right hand side of an account indicates an increase in the specific account it is recorded in.

    Rate this question:

  • 3. 

    Debit to an expense account

    • Indicates an increase in expenses incurred

    • Indicates an increase in owner's equity.

    • May indicate a drawing by the owner.

    • An interest free liability.

    Correct Answer
    A. Indicates an increase in expenses incurred
    Explanation
    A debit to an expense account indicates an increase in expenses incurred. Expenses are costs that a business incurs in order to generate revenue. When an expense is incurred, it is recorded as a debit to the expense account, which increases the total amount of expenses for the business. This helps track and calculate the overall expenses of the business, which is important for financial analysis and decision making.

    Rate this question:

  • 4. 

    Notes payable is a _______ account, with a normal _______ balance

    • Asset, debit

    • Expense, debit

    • Revenue, debit

    • Liability, credit

    Correct Answer
    A. Liability, credit
    Explanation
    Notes payable is a liability account because it represents the amount of money that a company owes to its creditors. The normal balance for a liability account is credit, which means that an increase in notes payable is recorded as a credit entry. This reflects the fact that the company has incurred a debt and has an obligation to repay it in the future.

    Rate this question:

  • 5. 

    Which of the following is false about a journal? ?

    • It discloses the complete effect of a transaction

    • It provides a chronological record of transactions

    • It helps to prevent errors because debit and credit amounts for each entry can be readily compared.

    • It keeps in one place all the information about changes in specific account balances.

    Correct Answer
    A. It keeps in one place all the information about changes in specific account balances.
    Explanation
    A journal does not keep all the information about changes in specific account balances in one place. Instead, it records the individual transactions in chronological order, including the debit and credit amounts for each entry. The purpose of a journal is to provide a complete and detailed record of all transactions, which can then be used to prepare financial statements and analyze the financial position of a business. The information about changes in specific account balances is usually summarized and organized in a separate ledger.

    Rate this question:

  • 6. 

    A debit to a liability account indicates

    • A credit was made to an asset account.

    • A decrease in an expense.

    • A decrease in a liability

    • A credit in a dividends account.

    Correct Answer
    A. A decrease in a liability
    Explanation
    A debit to a liability account indicates a decrease in a liability. This means that the company has either paid off a portion of its debt or has reduced the amount owed. Debit entries in liability accounts are used to record decreases in the amount owed by the company. By reducing the liability, the company's financial position improves as it owes less money to creditors.

    Rate this question:

  • 7. 

    The usual sequence of steps in the transaction recording process is

    • Journalize, analyze, post in ledger.

    • Analyse, journalize, post in ledger

    • Journalize, post in ledger, analyze

    • Journalyze, post in ledger, analyze.

    Correct Answer
    A. Analyse, journalize, post in ledger
    Explanation
    The correct answer is "analyse, journalize, post in ledger". This sequence of steps is the most common and logical order in the transaction recording process. First, the transactions are analyzed to determine their impact on the accounts. Then, the transactions are journalized, meaning they are recorded in the general journal. Finally, the journal entries are posted in the ledger, which involves transferring the information from the journal to the respective accounts in the general ledger. This sequence ensures that the transactions are properly recorded and organized in the accounting system.

    Rate this question:

  • 8. 

    Which of the following statements is false?

    • Revenues increase owner's equity

    • Revenues have normal credit balance.

    • Revenues are increased by credits.

    • Revenues are increased by debits

    Correct Answer
    A. Revenues are increased by debits
    Explanation
    The statement "Revenues are increased by debits" is false. In accounting, revenues are increased by credits, not debits. Debits are used to record increases in assets and expenses, while credits are used to record increases in liabilities, owner's equity, and revenues. Therefore, the correct answer is that revenues are increased by credits.

    Rate this question:

  • 9. 

    A complete journal entry includes all of the following except

    • The date of the transactions.

    • A brief explanation of the transaction

    • The balance of the accounts in the entry.

    • The accounts and the amounts to be debited and credited.

    Correct Answer
    A. The balance of the accounts in the entry.
    Explanation
    A complete journal entry includes the date of the transactions, a brief explanation of the transaction, and the accounts and the amounts to be debited and credited. The balance of the accounts in the entry is not included because the journal entry is used to record the individual transactions and their effects on the accounts, not the current balance of the accounts. The balance of the accounts can be determined by summing up the debits and credits in the journal entries and calculating the net balance.

    Rate this question:

  • 10. 

    Posting of journal entries should be done

    • In account number order.

    • In alphabetical order..

    • In chronological order.

    • Annually.

    Correct Answer
    A. In chronological order.
    Explanation
    Posting of journal entries should be done in chronological order to maintain a systematic and organized record of financial transactions. By posting entries in the order they occur, it becomes easier to track and analyze the sequence of events and ensure accuracy in the accounting process. This allows for better financial reporting and decision-making based on reliable and up-to-date information.

    Rate this question:

  • 11. 

    A credit is

    • The right side of an account.

    • Used to increase an asset.

    • The left side of an account.

    • Both a and b.

    Correct Answer
    A. The right side of an account.
    Explanation
    In accounting, a credit refers to the right side of an account. When recording transactions, credits are used to increase the balance of certain accounts, such as liabilities, revenues, and equity. This is in contrast to debits, which are used to decrease the balance of accounts. Therefore, the correct answer is the right side of an account.

    Rate this question:

  • 12. 

    The first step in the accounting cycle and the recording process is to

    • Enter transactions in a journal.

    • Transfer journal information to ledger account.

    • Prepare the trial balance.

    • Analyze each transaction

    Correct Answer
    A. Analyze each transaction
    Explanation
    The correct answer is to analyze each transaction. This is the first step in the accounting cycle and recording process because it involves examining the details of each transaction to determine its impact on the financial statements. By analyzing each transaction, accountants can identify the accounts that are affected, the amounts involved, and the specific journal entries that need to be recorded. This step is crucial to ensure accurate and reliable financial reporting.

    Rate this question:

  • 13. 

    Which of the following statements regarding a trial balance is false?

    • A trial balance proves the mathematical equity of debits and credits after posting.

    • A trial balance proves that all transactions have been correctly recorded.

    • A trial balance uncovers errors in journalizing and posting

    • A trial balance is useful in the preparation of financial statements.

    Correct Answer
    A. A trial balance proves that all transactions have been correctly recorded.
    Explanation
    The statement that a trial balance proves that all transactions have been correctly recorded is false. A trial balance only ensures that the total debits and credits in the ledger are equal, which shows mathematical accuracy, but it does not guarantee the accuracy of individual transactions. Errors such as recording transactions in the wrong account or omitting transactions altogether can still result in a balanced trial balance. Therefore, a trial balance is not a foolproof method for verifying the correctness of all recorded transactions.

    Rate this question:

  • 14. 

    A debit is not the normal balance for which of the following?

    • Asset account

    • Expense account

    • Drawing account

    • Capital account

    Correct Answer
    A. Capital account
    Explanation
    The correct answer is Capital account. In accounting, the normal balance for an account refers to whether it increases or decreases on the debit or credit side. For asset accounts, expenses accounts, and drawing accounts, the normal balance is on the debit side, meaning they increase with debits and decrease with credits. However, for a capital account, the normal balance is on the credit side. This means that the capital account increases with credits and decreases with debits.

    Rate this question:

  • 15. 

    In recording an accounting transaction in a double-entry system

    • The number of debits accounts must equal the number of credit accounts.

    • There must always be entries made on both sides of the accounting equation.

    • The amount of the credits must equal the amount of the debit.

    • There must always be entries made on both sides of the accounting equation.

    Correct Answer
    A. The amount of the credits must equal the amount of the debit.
    Explanation
    In a double-entry system, every transaction must have equal debits and credits. This is because the system follows the accounting equation, which states that assets equal liabilities plus equity. Each transaction affects at least two accounts, and the total debit amount must always equal the total credit amount. This ensures that the equation stays in balance and maintains the integrity of the financial records. Therefore, the amount of the credits must equal the amount of the debit in order to maintain the accuracy of the accounting system.

    Rate this question:

Quiz Review Timeline (Updated): Mar 18, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 18, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Apr 20, 2020
    Quiz Created by
    M. Sarr
Back to Top Back to top
Advertisement